In its August commentary - Global Uncertainty and Thirst for Yield to Dominate Markets for Rest of 2012 - Standish noted how the bond market rally in H1 has made strong-performing areas less appealing, such as intermediate duration high-yield bonds. In terms of corporate credit, the firm said it favors shorter-duration, medium-quality credit.

“We expect certain trends to continue, such as that growth in emerging markets will remain higher than in advanced economies,” said David Leduc, chief investment officer of Standish. “We’ll continue to look for value in both local currency and external emerging market bonds.”

Selected currencies such as the Mexican peso “remain undervalued,” the firm said - although these currencies will continue to be “highly correlated with global risk sentiment.”

Meanwhile, however, fiscal uncertainty in the US and Europe, along with the slowdown in China, will “weigh on the markets for the rest of the year,” with global economic activity accelerating modestly to 3.5 per cent in 2013 after the US resolves its budget issues, the firm expects.

Overall, Standish anticipates a shift in focus to the US due to the looming election and escalating rhetoric about the fiscal cliff.